In the wake of major flooding and land slips, an extra $20 million was added to Auckland Council's budget for disaster spending.
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Cash-strapped Auckland Council is retreating from five buildings, trying to sublet space it has contracts to occupy in cost-cutting steps due to the $295 million budget shortfall.
Even some of its furniture and fittings are up for grabs, as well as a floor in a North Shore building it hasnot even yet shifted into.
On the eve of what has been called its most important budget in 10 years, the council spotted potential savings by taking a razor to its rent bill, decamping from floors within its own inner-city headquarters, as well as four other blocks where it pays commercial landlords millions in rent.
Submissions on the budget are open till 11pm tomorrow night.
Rationalising corporate premises from the CBD to Albany means the council wants to sublet:
1. Three lower-rise floors in its own 31-level 1990s headquarters at 135 Albert St called Auckland House. Each floor is 1205sq m so it wants to quit about a third of a hectare all up. Car parking to be confirmed. The only building in this list of five that is council-owned. A decade ago, it spent $157m fixing leaks and refurbishing floors, slammed at the time by Cameron Brewer as “pure madness”;
2. Levels six and seven of the offices at 167 Victoria St West, a total of 2040sq m plus eight car parks in leased premises on the corner of Nelson St just up from Fanshawe St;
3. Level five of the ex-Vodafone HQ, 20 Viaduct Harbour Ave, the curved glass building on Viaduct Harbour Holdings’ leasehold land at the Fanshawe St/Halsey St corner across from Fonterra’s HQ, and car parks to be confirmed in what is now Auckland Transport’s headquarters, another leased building;
82 Wyndham St just above Fanshawe St in the CBD. Photo / supplied
4. The ground floor and level one of offices at 82 Wyndham St at the Fanshawe St corner which comes with 46 car parks, also a leased building owned by NZX-listed Argosy Property;
5. Level five of Albany’s 6-8 Munroe Lane, car parks to be confirmed, a building owned by NZX-listed Asset Plus headed by Mark Francis in the project not due to be finished till this winter but where hundreds of council staff will eventually work.
6 Munroe Lane, Albany, under construction. Even before it moves in, the council wants to sub-let an entire floor on level five. Photo / Asset Plus
A nine-page ‘request for proposal’ leasing document outlines the floors being flogged.
“The recent mayoral plan and annual plan budget identified savings from rationalising corporate premises largely as a result of a diversified approach to hybrid working,” the document said.
“As a result, the council is looking to sublease and direct lease a selection of official office premises in each 2023.”
Even the furniture, partitions and other internal fittings are up for grabs: “Potentially there is an opportunity to also lease the floors with the existing soft fit-outs in place.”
The council has long-term lease arrangements on many of the buildings, and all four leased premises have decent lease terms still to run.
Only its own HQ is owned - so it will create a new revenue stream if it manages to sub-let its own floors.
Auckland Transport's HQ at 20 Viaduct Harbour Ave. Photo / Google Maps
No price was put on the five-building annual rent bill.
“We wish to obtain the best value for money over the whole of life of the contract”, it said, but credit checks would be carried out on those wanting to sub-let floors.
Asked about the five-building sub-leasing campaign, the council’s corporate support services general manager Robert Irvine said it was due to the budget shortfall of $295m.
One strategy called out by the governing body was for the council and its CCOs to work together to review opportunities for property optimisation achieved through greater shared use efficiencies. Across the group, some corporate office space could be rationalised, Irvine said.
The approach was to market some office space with the aim to sublet premises where there was market interest.
Auckland House, 135 Albert St: floors for lease. Photo / Doug Sherring.
Property leads across the council-controlled organisations and the council were working together collaboratively to develop a plan to achieve best efficiencies overall, he said.
Within Auckland House, not all desks are used. Around 3500 employees work there but only around 2500 desks in the building are being used at any one time, Irvine said. That’s not unusual. Most large organisations work on the basis that only around 65 per cent of desks are used at any one time, he said.
They’re not just empty due to the pandemic-prompted WFH trend: “The reasons for desk under-utilisation are common across all offices, for example vacancies, leave, training and meetings.”
The nine-page document anticipated the leasing campaign starting towards the end of last month.
Asset Plus is developing the new Albany premises where the council is leasing the fifth floor - even before it arrives. Mark Francis heads that landlord business.
“The council has leased two-thirds of the building for 15 years,” Francis said of that under-construction block, due to be the council’s new northern service centre.
Asked if it was strange that a tenant would retreat before arriving, Francis said: “Yes and no. You get a change at the top, things change,” he said referring to Mayor Wayne Brown.
“I don’t expect it will be difficult to sub-lease,” Francis said.
